Nick Clegg is to widen the Liberal Democrats' campaign to include Tory and Labour seats previously regarded as unwinnable, amid growing confidence that his party can make shock gains in Thursday's election.

Private polling has indicated that several seats not previously on its hit list are now within the Lib Dems' grasp. Examples include the Labour-held stronghold of Redcar in north Yorkshire, Labour-held Colne Valley in west Yorkshire and the Tory-held seat of Wells in Somerset.

Party strategists claimed their policy of "tax fairness" – under which the first £10,000 of earnings would be exempted from income tax – was swaying an increasing number of floating voters.

In Redcar, where 1,600 workers are set to lose their jobs as a result of the decommissioning of the Corus steel plant, the Lib Dems came second in 2005 and would need to overturn an impressive 12,116 Labour majority.

"In these seats we now think we can win," said a senior party official. "We have pulled off shocks before, and we now believe we have a chance to do so in a number of others that we had not until recently regarded as our targets."

Campaigning in Somerset yesterday, Clegg, whose party held 63 seats prior to the election campaign, refused to put a figure on his aspirations, merely declaring that "the sky's the limit".

As he sought to portray the election as a two-horse race between his party and the Tories, he insisted the choice was between "fake change" under the Tories or "real change" under the Lib Dems.

Clegg welcomed the Guardian's and Observer's decision to back the party as a "significant moment in history".

He argued that the reasons for the newspapers' support reflected what a lot of people who used to invest a hope in Labour now felt. "They feel very let down after 13 years. They kind of feel that on the hope for political reform, on the hope for progress on civil liberties, on the hope for greater fairness in the tax system, a new approach to foreign affairs, they are now looking to the Liberal Democrats."

Lord Mandelson said the loss of the Guardian's support was not a blow to Labour and tore into the Lib Dems' policy programme. The business secretary added: "They [the Lib Dems] share some of the same values as Labour. But their policies are a joke. They aren't serious. Their policies are almost unfathomable and certainly unaffordable."

When he became Lib Dem leader in December 2007, Clegg set himself the target of increasing his party's number of Commons seats to 150 by the end of the next parliament – giving him two elections to deliver.

Last night polls suggested the party will be battling it out for second place in the national vote with Labour – and could win close to 100 seats in his first attempt on Thursday.

A YouGov poll conducted for the Sunday Times put the Tories on 35%, the Lib Dems on 28% and Labour on 27%. Other surveys had the Lib Dems in third position.

A retired American political science professor told Clegg yesterday he was an enthusiastic supporter of the Liberal Democrats – without realising he was chatting to the party's leader. Charles Hauss, who watched all three televised debates, assumed Clegg was part of the entourage travelling with the Lib Dem leader in a standard-class carriage on a train from London to Taunton. The academic asked: "What are you doing for Clegg?", to which the Lib Dem leader replied simply: "But I am Clegg."

Afterwards Hauss, 62, said: "I blushed immediately when I realised. He was younger than I thought a prime ministerial candidate would be."

The Lib Dems are also poised to swing a number of key university seats. A survey released last week by Opinionpanel showed that the percentage of students planning to vote Lib Dem had almost doubled over the course of the campaign to 50%.

Since Clegg's performance in the first televised leaders' debate, the party's national student organisation, Liberal Youth, has reported "tenfold" increases in volunteering and pledges of support.

Seats that the party could win off the back of student support include York Outer and Oxford East. Leicester South and City of Durham also now seem to be within Clegg's grasp.